Stage Set For Supreme Court Showdown Between Aereo, Broadcasters

As the battle between over the top (OTT) content provider Aereo and the four major broadcasters — ABC, CBS, Fox and NBC — heads to the Supreme Court of the United States, both sides are preparing back-up plans.

The Wall Street Journal reported on Tuesday that CBS has hinted that it has a “Plan B” under consideration. This would include not only lobbying Congress for a legislative solution to potentially shifting to cable transmission from broadcast. Last summer executives at Fox also made it clear that such a move might be necessary should Aereo win in the Supreme Court.

This all comes down to Aereo’s business model, which it claims is based on facilitating consumers’ rights to watch “free-to-air broadcast TV.” However, the broadcasters contend that Aereo, which provides a subscription-based service that captures those over-the-air signals and streams them to the Web is basically “stealing” content and charging for it.

Aereo charges $8-12 per month for its Internet service that allows users to watch or even record broadcast TV via a PC or mobile phone.

The case will be heard next week in the Supreme Court, and some analysts are predicting that it would be difficult for the cable-competitor to make its case. As the Huffington Post reported, the company will face off against not only the broadcasters but also with the influential US Solicitor General’s office and the Copyright Office. This would make it a tough fight for Aereo.

The major broadcasters were also joined in a March 2012 lawsuit that included PBS, Telemundo, Univision and others.

“I think a majority of the Court will be skeptical of Aereo’s position and thus likely to rule in favor of the broadcast-petitioners,” Akin Group’s Pratik Shah told the Hollywood Reporter – while another expert who spoke only on background and supported the Aereo position suggested the broadcasters’ favor was somewhere between 60-40 and 70-30.

“(Congress) really messed up this statute,” Temple University’s David Post, a cyberlaw specialist who clerked for Justice Ginsburg and submitted an amicus brief backing Aereo, told the Hollywood Reporter. As a result, he added, “nobody can make a good argument. Wherever you go, you leave a piece of the puzzle broken on the ground.”

Even as this case heads to the nation’s highest court, Aereo has continued to roll out its service in new markets. This involves more than just making an app or software available to new customers.

“Once Aereo establishes itself in any new market, the team brings in what they call an Antenna Farm, or internally, a Raz-12,” TechCrunch reported. “This is essentially a small box, that sits on a platform on a data center roof, and is fully insulated, air-conditioned, and lightning proof. It also has one wall that is made entirely of RF transparent material, meaning that the equipment inside is capable of communicating with signals coming from outside the box.”

Inside those boxes are multiple antenna boards, each of which can hold a reported 160 antennas – and each cube can provide service to 7,000 and 10,000 customers. From these antennas the signals of the over-the-air broadcasts can be “grabbed,” and from this Aereo can transcode the data and provide it to customers.

By ditching the airwaves – as Fox and CBS have considered – it would be impossible for Aereo or its similar competitors to capture the signal.

However, as the WSJ noted, there are still many issues to factor in.

“When broadcasters license rights from sports leagues, the deals normally assume the outlet will be an over-the-air TV network. Leagues may worry that audiences for their games could shrink on TV as Web audiences grow, reducing the value of those TV rights in future deals. Broadcasters point out that some major leagues have filed court briefs supporting their legal case.”

“It’s hairy,” Ed O’Brien, a New York-based digital-media consultant who was involved in the launch of the HBO Go mobile app, told the WSJ. “It’s not as simple as flipping a switch.”